Eq: Financials

Eq: Financials (114)

Thursday, 27 October 2022 06:00

Direct indexing and to the point

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Direct indexing: you’re on.

While ETFs still have their place, the benefits of direct indexing are more than finding traction, according to Finance.Yahoo. 

Want to create a portfolio up to the task of performing on a par with – or exceeding the performance – of the popular S&P 500 index? Direct indexing’s all over it.

Index funds and ETFs are well and good, but direct indexing also means greater control over fund holding and the potential to outperform, according to Schwab. 

Spurred by technological strides that induced investment minimums south, direct indexing – once limited to institutional and high net worth investors – now can sit comfortably in the backyard of a wider swath of investors.

The latest wave of innovation and direct indexing are going hand in hand. Those advances include commission free trading and traditional shares, yielding greater alternatives and control to investors.

"Allowing for personalization makes direct indexing a great fit for those who generally like low-cost passive strategies but are also looking to potentially outperform the index on both before-tax and after-tax basis, or have more flexibility in terms of what they own," said Nitin Barve, CFA, director of Portfolio Analysis and Advice Tools & Policy at the Schwab Center for Financial Research.

Monday, 24 October 2022 11:20

Citizen’s arrest?

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See the badge, mister? Shiny, huh? Smudges? Please.

Yep; the sheriff’s in town. At the recent 2022 PLANADVISER National Conference, the ongoing enforcement of the Regulation Best Interest package was a hot topic among SEC speakers, according to -planadvisder.com. The package now is fully enforced. But the subject had plenty of company; other SEC regulatory efforts -- including proposed regulations concerning money market funds, ESG investments and cybersecurity – also were addressed.

The SEC’s updated interpretation of the fiduciary duty as prescribed by the Investment Advisers Act was in total effect as well.

Now, when the law speaks, of course, listening up’s highly recommended. Here, for instance: upon passing a recommendation to a retail customer, brokerage professionals are required to act in a retail customer’s best interest. Putting their own financial or other interest ahead of the retail customer’s interests? Yep: a no no for those professionals.

For more than the past year, Reg. Bi and Form CRS compliance have been in the crosshairs of FINRA and the SEC. That included the maiden SEC Reg. Bi settlement, which occurred in June, according to goodwinlaw.com.

Friday, 21 October 2022 05:17

The whirlwinds of volatility

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More interest rate hikes looming? Put it this way: look out below.


Or at least it’s exceedingly likely, according to cnbc.com. That’s because, even though year over year inflation receded slightly in August to 8.3%, from July’s 8.5%, it continues to hover well above the Fed target: 2%. Hence the likelihood of additional upticks.


Now, naturally, to pile on, with unemployment still low at August’s 3.7% mark, up from 3.5% in July, some clients of financial advisors are fretting over their jobs taking a hike.

Home affordability? No exception – especially in light of escalating mortgage rates and prices that are a little rich for the wallet, tamping down the potential pool of buyers.

Despite the whirlwind whipped up my volatility, with penny stocks, there’s still money to be made, according to marketweatch.com.


A catch, however: in the eye of a mercurial stock market, knowing how to invest isn’t easy. A few tips:


Do your research – especially in the land of penny stocks. Dig down and, prior to investing, learn all you can about the company. 


Have a plan. In the clutches of volatility, have a plan and don’t deviate from it  


Diversify your portfolio. Putting all your eggs and one basket. Nada. Don’t


Saturday, 15 October 2022 03:54

If it looks like a penalty box

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In the uniquely entitled category ‘there’s a first time for everything’, the Financial Industry Regulatory Authority fined a former registered rep $5,000 and issued a six-month suspension, according to thinkadvisor.com. The action was its first disciplinary moved linked to Regulation and Best Interest.

In a pair of knuckle raps, Charles V. Malico not only willfully violated Reg BI’s Care Obligation but FINRA Rule 2010 as well “by recommending a series of transactions in the account of one retail customer that was excessive in light of the customer’s investment profile and therefore was not in that customer’s best interest,” as laid out by FINRA’s order. This occurred from July 2020 through November 2021.

This action represents the regulator’s first Reg BI-related fine, confirmed a FINRA spokesperson. It came on the heels of a review of an enforcement of an arbitration claim.

“Malico frequently recommended that Customer A buy and then sell a security, only to repurchase the same security weeks or even days later,” the settlement states, according to investmmentnews.com.

The previous suitability standard -- governing the conduct of brokers with customers -- was supplanted by Reg Bi.  

Thursday, 13 October 2022 09:45

Model portfolios are making more than a little noise

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Model portfolios? They’re making their presence felt.

Their use by advisors is one of the most significant factors now reshaping the financial product distribution terrain, according to broadridge.com.

Gaining a firm handle not only how – but why – advisors are leveraging the model portfolios yields insight into the idyllic sales approach required to lasso model driven fund and ETF assets. What’s more, its effect on the distribution strategies and subsequent profitability generated by asset managers talks with a big stick.

Within the $6.5 trillion investment advisory solutions industry, these types of models perpetually have played a key role, according to MMI.

Working from scratch, advisors can build each client portfolio in their book of business.  Not only that, using a more standardized approach, advisors, by tapping into broker/deal programs like rep-as-portfolio, can take their own models and run with them.

It doesn’t stop there. Advisors -- particularly IBDs and RIAs – have the leeway to hang onto discretion and executive models through emerging model marketplaces. 

The reason for their popularity are apparent, according to troweprice.com. Not only can they abet your ability to streamline your business, you also can pare risk. Another key attribute: they avail you the opportunity to devote more time to clients.

However, performance can vary wildly depending on the model, which can make discovering the idea fit you’re your client less than easy pickings.  


Monday, 10 October 2022 04:28

Advisors and the art of the deal

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Advisors, it seems, are the belles of the ball. Stepping up to their full potential, they’re drawing sweet landing spots along with equally tantalizing deals to sign on the bottom line, according to forbes.com.

But the primary force juicing the movement of advisors is, well, the advisors as they yearn for more freedom and control of how they do business with clients.

Earlier this month, the fourth annual CNBC Financial Advisor 100 was announced by the network, according to cnbc.com. Top advisory firms – which provides clients with a big boost addressing their financial welfare – are recognized by the ranked list.

Some investors have a plan to help deal with these turbulent times when the need for financial guidance is paramount; others don’t and are compelled to closely evaluate their finances and take the reins in order to withstand a topsy turvy environment. Taking on a financial advisor is a way of doing that.


The top 10 2022 CNBC FA 100:


  1.         Woodley Farra Manion
  2.         Dana Investment Advisors
  3.         Albion Financial Group
  4.         Heritage Investment Group
  5.         Edgemoor Investment Advisors
  6.         Salem Investment Counselors
  1.         Leavell Investment Management
  2.         Halbert Hargrove Global Advisors
  3.         The Burney Company
  4.       Lee, Danner & Bass
Monday, 10 October 2022 04:27

Clients bending the ears of their advisors

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Is this tune, some might ask, on auto pilot?

Market conditions, particularly given the atypical transition from one week, month and quarter into a new period on each scale, are rife with uncertainty, according to dailyfx.com.

Contributing to the volatility, of course, is a trio of factors: the perpetually changing backdrop surrounding investor sentiment and economic forecast, not to mention where things are down the road.

Meantime, probably not surprisingly, fanned by burgeoning inflation and interest rates, which are cultivating qualms about a potential recession, clients are airing out their trepidations with their financial advisors, according to cnbc.com.

As for further hikes? Buckle up, especially since, in the name of warding off inflation, the Fed ratcheted interest rates by 0.75% basis points in September – for the third straight time, to boot.

The predominant concern for clients given the economic environment: “What the labor environment is going to look like and what their risk is as far as unemployment goes,” said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York. Their clients are largely between ages 28 and 42.

“At this point it’s speculation,” Boneparth said. “It’s hard to point to data that says we need to be concerned right now.”



Friday, 07 October 2022 07:37

Skilled active managers can show what they’ve got

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Skilled active management? The cocktail of ballooning inflation, interest rates and dispersion across fixed income sectors basically is giving managers the proverbial chance to strut their stuff, according to -wellington.com.

That’s why now might be an idyllic chance for investors to put their portfolios in a space to opportunistically position their portfolios.

Their individual fixed income markets have priced in the gulf in threats of recession and inflation in the euro area opposed to the U.S, the site continued. Dating back to the dawn of the Ukrainian invasion, compared to the U.S., credit spreads in the euro area have gotten wider.

This year, investor trepidations over fixed income performance have maintained their momentum, according to wellsfargo.com. Among top questions in the minds of income investors:

  1. What is happening to bonds so far in 2022?
  1. Why continue to invest in bonds?
  1. Why is the Fed garnering so much attention this year?
  1. What should investors expect from the remaining three Fed meetings of this year?
  1. What does Fed quantitative tightening mean?
  1. What do you mean when you say, “financial conditions in the economy are tightening”?
  1. Should we be worried about liquidity in bond markets?
  1. What is the shape of the U.S. Treasury yield curve telling us?
Sunday, 02 October 2022 11:05

ESG rules news cycles

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It seems that during the past couple of years, ESG news has downright owned news cycles, according to mediablog.prnewswire.com.


In the course of that period, certain trends have reared their heads. With that in mind, as Q3 grinds to a conclusion, it appears that companies are fine tuning their messaging in a trio of ways as reflected In press releases PR Newswire received this month.

  1. Avoiding the Appearance of Greenwashing
  1. More Frequent, Detailed Progress Updates
  1. Simplifying ESG


In time, it’s anticipated that there will be a further uptick in disclosures associated with the climate, according to indiacsr.in.

It will be associated with commitments internationally to, among other things, the EU’s proposed Corporate Sustainability Reporting Directive and the International Sustainability Standards Board.

From around the globe, top five ESG updates are:

  1. Inflation Reduction Act – the most significant investment turned into law in the US
  1. Climate-related shock is a severe financial risk
  1. Allocation of the largest – ever corporate sustainability bond
  1. New renewable energy goals for the city of Chicago
  1. The world’s first 100% hydrogen-powered passenger train


Think only a number cruncher can efficiently convert tax losses into assets?

Well, why it might not carry engraved business cards, direct indexing also can turn that trick, according to advisorperspectives.com.

Case in point: with clouds threatening a repeat performance in the portfolios of your clients this year – especially in light of the volatility more than making its presence felt in the financial markets. Sure, with intense inflation, the Ukraine war and supply chain headaches putting a dent in corporate profits, the Fed’s stoking rates at a seemingly breakneck pace. Yeah; yowser. That said, however, the market’s volatility yields an idyllic chance to not only tax loss harvest but also showcase how direct indexing – with room to spare, most effectively experiences the reverberations of tax loss harvesting benefits, the site continues.

Against the backdrop of volatility, of course, with direct indexing, the investors owns the individual securities rather than a comingled fund, according to russellinvestments.com. While losses absorbed on receding stocks belong to them, down the line, those setbacks can be leveraged to offset gains. That can mean a significant boost toward paring down the tax bill of the investor.


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